Will GM Finally Change the Car Buying Process?

I’ve been a longtime proponent of changing the way cars are sold. The dealer system has worked for many years, but I’d love to see manufacturers sell directly to consumers online.

Tesla is dealing with this issue right now, as it tries to build new company-owned stores across the United States and experiences pushback from traditional dealers in the form of lawsuits. That’s unfortunate, but sometimes old ways are hard to change.

That’s why I was more than a little surprised to read that General Motors, a stalwart in the old ways of doing things, has come up with a plan to begin the process of selling vehicles online.

The problem with buying cars online is that they need to be test-driven first. The Detroit News quoted CEO Dan Akerson as saying,

It doesn’t mean we are going to try and bypass our dealers, but why not in this tech-savvy culture we have, this economy we have, (allow) the millennial to come in and… sign and go.

That’s still not selling cars online, like buying a refrigerator from Amazon and having it delivered to your home, but GM’s plan is a small step in the right direction. Potential buyers will be able to research their cars, build them to exact specs, establish a price and get a trade-in value before heading to the dealer to sign and drive their new car home.

As part of the process, GM wants its dealers to establish a retail environment modeled after Apple’s ingenious way of selling computers and iPhones to the public. These new sections of the dealer will be called Connection Centers, and they’ll offer a place for potential buyers to come in, look around and take test drives without any pressure to buy.

After the sale, these centers would act as technology support centers where owners can come and get answers and training on the myriad of technology in their cars, such as teaching customers how to pair a cellphone to the in-car system.

As you might expect, I have an opinion on this.

Currently, shoppers can use the web to research, compare and shop to their heart’s content. They can even build cars to their specs and get the MSRP of the customized car. GM’s plan doesn’t seem to go much deeper than that. Why not allow buyers to make an offer, arrange final financing, pay online and then pick up the car at a Connection Center?

We shouldn’t cut out dealers—they serve an important customer service, delivery and maintenance role, but I hope to see a future of true online car buying.

Maybe Tesla can figure out how to lead the way.

If you could, would you buy a new car online and visit the dealership only to pick it up?

The reason dealers are freaking out is that they have developed an elaborate system for extracting extra cash from owners by upselling, finance games and other less than honest sales techniques.

The second step in car buying for customers at a dealership is to be ushered into the “closers” office, where the buyer is pummeled with a flood of money-sucking “add-on’s” (mostly useless) like service contracts, upholstery stain protection, rustproofing, and the like.

You also completely avoid the issue of trade-in vehicles, which occur in a high percentage of deals. This is another important place for dealers to take advantage of consumers. Hook them into making the decision to buy a new car, then lop thousands off the value of their trade in vehicle to boost profits. Most consumers don’t want to deal with selling their old vehicle, and trade-ins generally make more money for the dealer than the new car.

Last, take a look at the service department of most dealers. GM especially, with mediocre quality, generates huge volumes of repairs and large service departments. Running a service department isn’t free, and is a part of the cost of a car dealership business.